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COUNTRY INSIGHTS

The Labor market tightens, supportive of wage pressure
ISRAEL · Report · 27 Dec 2021

1. An increasingly tight labor market is expected to support wage pressure and therefore some inflationary pressure as well. 2. Economic indicators point to steady growth in early Q421, before the December Omicron concerns. 3. MSCI is likely to reclassify Israel in MSCI Europe (from...

The labor market tightens, supportive of wage pressure
ISRAEL · In Brief · 26 Dec 2021

Economic data released last week point to an increasingly tightening labor market, as the number of employed increased reducing unemployment, while the number of job vacancies continued to rise. The number of employed increased by 92 thousand in November, reducing broad unemployment (including th...

Inflation in Israel remains low compared to most countries
ISRAEL · Report · 20 Dec 2021

Highlights​: Low inflation in November: *Headline inflation in November inched higher to 2.4% y/y from 2.3%, in line with our forecast but at the low end of consensus. *Core inflation has remained stable at 2.1% since September. *Housing rental prices accelerated in November, offset by a ...

Inflation in Israel remains low compared to most countries
ISRAEL · In Brief · 19 Dec 2021

Low inflation in November Headline inflation in November inched higher to 2.4% y/y from 2.3%, in line with our forecast but at the low end of consensus. Core inflation has remained stable at 2.1% since September. Housing rental prices accelerated in November, offset by a price decline in clothing...

Inflation in November at low end of expectations
ISRAEL · In Brief · 15 Dec 2021

Low CPI print in NovemberInflation in November declined by 0.1% m/m and increased by 2.4% y/y (up slightly from 2.3% last month). Expectations were mostly in the 0.0%-0.1% range (our forecast was -0.1%). Both fresh produce prices (-4.6% m/m on warm weather) and clothing prices (-0.8%) surprised o...

Steady and strong CA surplus remains shekel positive
ISRAEL · In Brief · 14 Dec 2021

The CA surplus in Q321 reached 5.3bn USD from 4.9bn in Q2 and 6.4bn in Q1. In Q3 the trade deficit increased by 1.1bn to 6.0bn while the service account surplus increased by 0.6bn to 10.1bn. Net revenues from financial investments abroad reduced the primary income account deficit. Net FDI reached...

Rapid decline in fiscal deficit improves fiscal credibility
ISRAEL · Report · 13 Dec 2021

Highlights: The fiscal deficit declines sharply * In November, the fiscal deficit declined to 4.6% GDP LTM from 5.5%. * Tax revenues are up 24% y/y this year while non-Covid spending is up only 2.3%. We expect a low fiscal deficit of 2.7% in 2022. FX: The shekel appreciated by 1....

Rapid decline in fiscal deficit improves fiscal credibility
ISRAEL · In Brief · 12 Dec 2021

The fiscal deficit declines sharply In November, the fiscal deficit declined to 4.6% GDP LTM from 5.5%. Tax revenues are up 24% y/y this year while non-Covid spending is up only 2.3%. We expect a low fiscal deficit of 2.7% in 2022. FX: The shekel appreciated by 1.7% last week against the basket. ...

Some initial signs of wage inflation
ISRAEL · Report · 06 Dec 2021

1. Wage growth accelerated in September and will be a factor supporting inflation. 2. Private consumption growth has shifted from goods to services. 3. The shekel appreciated by 0.8% last week; fundamentals remain pro-shekel.

Some initial signs of wage inflation
ISRAEL · In Brief · 05 Dec 2021

Highlights of our weekly review:Signs of some wage inflationThe average wage increased by 1.7% m/m in September (sa).Average wage growth over the past two years is up 4.8% annual, accelerating from 4.1% last month.Wage pressure is more apparent in communications and information (up 9.2%), finance...

The shekel weakens on market volatility
ISRAEL · Report · 29 Nov 2021

Highlights: The Governor stresses lower for longer * The MPC emphasized that inflation in Israel is lower than in most countries and within target, allowing for patience regarding tightening. The MPC stressed the downside risks of another Covid wave, which appears more of a real possibil...

The shekel weakens on market volatility; the Governor stressed low rates for longer
ISRAEL · In Brief · 28 Nov 2021

Highlights of the weekly macro review:The Governor stresses low for longer The MPC emphasized that inflation in Israel is lower than in most countries and within target, allowing for patience regarding tightening. The MPC stressed the downside risks of another Covid wave, which appears more of a ...

Rates on hold, FX intervention dependent on the state of the economy
ISRAEL · In Brief · 22 Nov 2021

There were no surprises in the rate hold decision. The statement noted that those countries which hiked have inflation above target. In Israel market expectations are at the high end of target (but within) and forecasters and the BoI model expect lower inflation in the next 12 months. Regarding F...

Shekel appreciation continues; expected to moderate inflation
ISRAEL · Report · 22 Nov 2021

GDP growth is expected to reach close to 6.5% this year and 4.8% in 2022; the output gap will narrow but will still remain somewhat disinflationary. Inflation is expected to reach 1.5% NTM, as a strong shekel offsets (in part) other inflationary factors. We do not expect a rate change today; the ...

Shekel appreciation continues; expected to moderate inflation
ISRAEL · In Brief · 21 Nov 2021

GDP data in Q3 was “decent” GDP growth reached 2.4%, but was up 3.5% excluding taxes on imports. Private consumption excluding durables increased by 5.1%. Investments improved, both residential and non-residential. Exports disappointed Annual GDP growth in 2021 will mostly come in closer to 6.5% ...

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